Traditional classification of ratio is done on the basis of the financial statements from which the ratios are calculated. Under the traditional classification, the ratios are classified as:
(i) Balance sheet ratios,
(ii) Income statement ratios and
(iii) Inter-statement ratio.
(i) Balance sheet ratio: If both items in a ratio are from balance sheet, it is classified as balance sheet ratio.
(ii) Income statement ratio: If the two items in a ratio are from income statement, it is classified as income statement ratio.
(iii) Inter-statement ratio: If a ratio is computed with one item from income statement and another item from balance sheet, it is called inter-statement ratio.

(i) Long-term solvency means the firm's ability to meet its liabilities in the long run.
(ii) Long term solvency ratios help to determine the ability of the business to repay its debts in the long run.
(iii) The following ratios are normally computed for evaluating long term solvency of the business:
(i) Debt equity ratio
(ii) Proprietary ratio
(iii) Capital gearing ratio

Debt collection period is the average time taken to collect the amount due from trade receivables. Lesser the debt collection period, greater is the efficiency of management in collection of cash from trade receivables. It is calculated as follows:
Debt collection period (in days) = \(\frac { Number\quad of\quad days\quad in\quad a\quad year }{ Tradereceivablesturnoverratio } \)
Debt collection period (in months) =\(\frac { Number\quad of\quad days\quad in\quad a\quad year }{ Trade\quad payable\quad sturn\quad over\quad ratio } \).

(i) Gross profit ratio: Gross profit ratio is the proportion of gross profit to net revenue from operations. Gross profit ratio shows the margin of profit available out of revenue from operations. It is computed as below:
Gross profit ratio = \(\frac { Gross\quad profit }{ Net\quad revenue\quad from\quad operations } \) x 100
(ii) Net profit ratio: Net profit ratio is the percentage of net profit on revenue from operations. It is calculated as under:
Net profit ratio = \(\frac { Net\quad profit\quad after\quad tax }{ Revenue\quad from\quad operations } \) x 100

Values reflected by the company are
(i) Doing Your Best: A company does its best by analysing the financial ratios and enabling the interested parties in taking better decisions about investing and tending.
(ii) Transparent: A company works towards transparency by simplifying the accounting information for various users.